Trinidad & Tobago Country Statistics

LOCATION

Located 11 km (7 miles) off the north-eastern coast of Venezuela and at the most southern tip of the Caribbean archipelago, the twin-island nation of Trinidad and Tobago is strategically positioned for trade with neighbouring islands as well as with North and South America.

TRINIDAD AND TOBAGO ECONOMY

Trinidad and Tobago is the largest economy in the Caribbean Community (Caricom) and is highly dependent on its petroleum sector, which contributes approximately 32 percent of GDP and 82 percent of exports. In the early 1990s the petroleum sector evolved from being oil dominant to a natural gas dominant sector. Currently, Trinidad and Tobago is a leader in petrochemical exports and is one of the world’s largest exporters of ammonia and methanol. However, the sector is currently facing challenges with declining oil and gas production in addition to weak global energy prices. Average crude oil and condensate production have been trending downwards due to the decline in extraction from maturing hydrocarbon fields and the absence of significant new crude oil discoveries. Natural gas output has also trended downward because of disruptions for upgrades and other maintenance work. However, natural gas production is projected to improve in 2018 with additional output from the new Juniper gas project which commenced operations in August, 2017. New gas from the Trinidad Onshore Compression (TROC) project, the Angostura Phase 3 field and the Sercan Phase 2 field would also boost output in 2018. Weak global energy prices had put a damper on the domestic energy sector, with the West Texas Intermediate (WTI) oil price falling from an average of US$105.79 per barrel (p/b) in June, 2014 to an average of US$30.32 p/b in February, 2016. The oil price is expected to average US$50.56 p/b for 2017 and remain low in 2018 at US$52.77 p/b.

Between 2000 and 2007, the domestic economy experienced healthy expansion with real GDP growth averaging around 8 percent. Although Trinidad and Tobago weathered the 2008 financial crisis better than many other countries, economic growth has been patchy and the government has been running on fiscal deficits since then. In 2016, the economy suffered its third consecutive year of contraction of 6 percent, following contraction of 0.6 percent in 2014 and 2015. The poor performance of the energy sector has resulted in negative spill over effects in the non-energy sector and as a result, there have been some job losses, mainly in the distribution and construction sectors. In spite of this, this country still has a highly skilled and experienced workforce. The decline in export earnings and the tight foreign exchange market have placed some pressure on the TT currency, which has depreciated over the last year. As a result of the high demand for foreign exchange coupled with the shortage in foreign currency dollars, the nation’s foreign reserves has dwindled to below 10 months of import cover as at November, 2017. Although the foreign reserve position is still considered to be within a healthy range, it is a major cause for concern as May, 2008 (2008 global financial crisis period) was the last time it was at this level.

In 2017, Trinidad and Tobago suffered credit rating downgrades from both Moody’s Investors Service (from ‘Baa3’ to ‘Ba1’) and Standard and Poor’s (from ‘A-‘ to ‘BBB+’) and was also blacklisted as a tax haven by the European Union (EU). Despite these challenges, the country boasts a solid financial system and the relevant authorities remain committed towards becoming fully AML/CFT compliant in the near future. The nation also has a well developed industrial sector and a number of experienced industrial services companies. The domestic manufacturing sector is also diverse, with businesses in areas such as food processing, pharmaceuticals, alcoholic beverages, cosmetics, steel, cement, glass and plastics. Tobago is mainly dependent on tourism as it has strong nature and eco-tourism appeal.

Although Trinidad and Tobago’s fiscal position has been weakened due to declining energy sector revenues, the debt burden and the external debt position remain favourable at approximately 63 percent of GDP and 17 percent of GDP, respectively. The Heritage and Stabilization Fund (HSF) also acts as a sizeable asset buffer for the domestic economy in the short-term. Going forward, the authorities are expected to remain committed to implementing sound fiscal consolidation and structural reforms. Currently, there is a greater need for diversification and this thrust is likely to focus mainly on tourism, international financial services and maritime activities. However, the energy sector will continue to be the mainstay for the economy over the next decade.